February 6, 2018 at 3:05 pm #157965
Our primary residence is worth $450k and we owe $65k. ($385k equity). We want to buy a rental property for about $250k for our daughter to live in w/rental income from roommates that would cover principal, interest, & taxes. To buy the rental, we are doing a cash-out refi on our primary residence so that we’re buying it for “cash” in order to avoid the 20% downpayment and higher interest rate required for a mortgage on an investment property. The cash-out refi would be for $315k to cover the cost of the $250k rental purchase + our existing $65k current mortgage. Here’s the twist: shortly after buying the rental, we want to move—sell our primary residence ($450k) and buy a new one of the same value. When we sell our $450k house, we’ll need to pay off the $315k cash-out refi loan since it is secured by our primary residence only. Therefore, we would then have to take out a new $315k first mortgage on the new house to replace the cash-out refi that we had just taken out a few months prior to buy the rental. We’ll have to pay two sets of closing costs, etc. to borrow the same $315k twice in a matter of months. Could we somehow do a blanket mortgage to avoid this? Our credit score is 800+, the $65k is our only debt, we have some emergency savings that we’d rather not touch and sizable retirement assets that are not accessible yet–our financial picture is healthy.February 6, 2018 at 3:12 pm #159121
Thank you Susan for visiting our site and for your question. A blanket mortgage could be an option, although they usually are used just for investment properties and not for a primary residence. Here’s a link to our in depth guide on blanket mortgages https://fitsmallbusiness.com/blanket-mortgages/ and the article has contact information for a lender that offers blanket mortgages.
Best of luck,